Bill Tracker

The objective of this bill is to provide an incentive for development of energy storage equipment, for example lithium-ion batteries, by enabling the storage infrastructure properties to be taxed similarly to renewable energy (RE) facility properties.   RE properties are taxed as public utility property at a rate of 29% of valuation times the mill levy. Valuation for RE is discounted relative to the value of a comparable gas turbine.  

According to the bill sponsors, this would make the tax on energy storage systems 30-40% of what would be due under current property rates. 

Witnesses in Support stated that lower taxes on battery storage systems were needed to provide an incentive to further development.  At this time, there is only one small battery storage system operating in the state.  Commercial supporters stated that storage technology is not as mature as solar or wind generation and equipment prices are high. They are looking for ways to facilitate investment in storage; with a known tax liability, they can develop RE more efficiently because of the improved stability and predictability of costs. 

Opponents represented counties and special districts that have concerns about loss of property tax revenue because the valuations of renewable energy facility properties [infrastructure] are typically lower other properties.  Counties have been working with RE developers to keep fees low, in recognition of the benefits of RE to their economies and to the environment. 

There is a certain tension between local authority to determine property taxes and adjustments imposed by state regulations. 

The League Supports this bill to facilitate more efficient implementation of our expanding RE resources.  The availability of storage systems will support use of RE at night and when the wind is not blowing. It is a League position to support action by appropriate levels of government to encourage RE including through financial incentives.  

We support this bill to evaluate the wholesale, opt-out model of community choice energy (CCE).  To quote the legislative declaration, “…communities that are served by an investor-owned electric utility may choose their whole electricity suppliers, while the electricity continues to be delivered by the incumbent utility. “

An objective of CCE is to enable communities to meet goals for renewable energy within a target window of 2025 to 2040 without depending on their current electric utilities’ internal timelines for transition. 

Studies will include lessons learned and best practices from states where CCE has been implemented.  The investigative docket will explore:  costs; consumer protections; CCE financing; regulatory and legal issues; approval process by customers within a jurisdiction; demand-side management; minimum requirements for independent power producers; integration of distributed energy resources, such as solar.

The bill was amended in committee to add topics and questions to be explored in the investigative process:

• Whether customers in municipally owned or cooperative electric associations would be excluded;
• Whether CCE will aid Colorado in reaching its clean energy and greenhouse gas reduction goals;
• To assess community experiences with wholesale, opt-out CCE in other states;  
• The impact on low-income customers including availability of low-income programs [currently] offered by the investor-owned utility.

League position is that combating climate change is necessary, including promotion of renewable energy.  We encourage actions for energy assistance for low-income individuals.

The bill recognizes that Colorado must plan for today and the future in regards to a transition to clean, renewable energy. Colorado is growing, so too must the expansion of energy efficient technologies and sources in new construction. The knowlege that renewables will help reduce carbon emissions and prevent global warming will create a demand for the options offered for wind and solar energy. The electric vehicle prewiring encourages vehicle purchases. The home heating and cooling option saves builders money in infrastructure. League believes in conserving energy as well as environmentally sound use of energy resources. It believes in a predominent reliance on renewable energy.

Update 3-13.

Greenhouse Gas Emissions Report (LLS 20-0339) by the Legislative Council Staff concluded that SB 20-038 as introduced “could potentially reduce greenhouse gas emissions in the transportation-related sector by about 0.4 percent in 2030, which represents a 0.1 percent decrease in total projected statewide greenhouse gas emissions in 2030.” 

The report also noted that after an amendment that limited the biodiesel blend requirement to only the non-attainment area (Denver Metro Northern Front Range) the savings in GHG would be reduced.  Another amendment to exempt locomotives and off-road mining equipment would further reduce GHG emissions savings.

The bill promotes the development of biodiesel enterprise in our state.  The conversion of agricultural lands from foodstuffs such as soy to fuel production raises additional human health and ecological concerns. Creating an alternative market for food crops adds to pressures internationally to convert local agricultural lands and natural areas to the production of fuel market-supported crops. 

For these reasons, in addition to the likely minimal impact on reducing ozone pollution along the Front Range, the League has taken a position of opposing this bill. 

The League supports measures to reduce vehicular pollution including changes in engine design and fuel types.

The amended bill only applies to diesel fuel sold in the EPA nonattainment area: the northern Front Range from roughly the Palmer divide and north to the border. The area is out of compliance for any or all of 6 criteria pollutants, especially ozone in the summer months.

Because the regulation will only require blended fuel in summer (June1 to mid Sept), there is an implication that ozone pollution might be reduced. But this is not a claim made for biodiesel. [see EPA and US Dept of Energy] Ozone is not a tailpipe emission but is formed in the atmosphere when nitrogen oxides (NOx) and volatile organic compounds react in the presence of sunlight.

The apparent objective of reducing air pollution only in the non-attainment areas and only during summer months is a limited one. For this reason we will monitor for further information and possible further amendments. A desirable element in the amended bill is directing the Regional Air Quality Council and CDOT to consider replacement of diesel trucks and commercial vehicles manufactured before 2010, which generally have less effective pollution controls in engine designs.

The principal objective is to further encourage the development of Community Solar Gardens (CSG) by extending the property tax exemption from both local and state assessed taxes until 2026, currently due to expire in 2021. Currently all CSG in the state are < 2MW and are assessed locally. The initial loss of revenue to local jurisdictions will be backfilled using proposed increased revenue from discontinuing severance tax exemptions on coal production. 

Severance tax is imposed on production or extraction of minerals, oil and gas, and coal.  Tax credits are allowed against a company's severance tax liability.  For coal, this is 50% for coal produced by underground mines. The amount of coal that will become subject to severance taxes is approximately 47% of coal produced in Colorado.  For example, estimated revenue will be $2.9M in FY 2020 (part year) and $5.7M in FY 2021.

Beginning in 2022, revenue in excess of that needed for local reimbursements will be transferred to the Just Transition Fund created in 2019 to assist workers and communities subject to significant economic impacts due to transition away from coal-related industries. After the CSG property tax exemption expires, all severance tax revenue will be transferred to the Just Transition Fund.

The bill proposes to change the valuation method for CSG from using the initial cost of the installation depreciated over 20 years to one based on expected income over 30 years. The latter will result in stable taxes on CSG over a 30-yr lifespan.

Bill opponents stressed the negative impacts of loss of coal business and good paying jobs certain counties. An increase in severance tax due may cause mines to close earlier than current trending, e.g., due to closure of coal-fired power plants. Many felt that all of the new severance tax proceeds should go to the Just Transition Fund and not be used to support the solar industry by paying property taxes.

Proponents and sponsors noted the role of burning coal in climate change and the urgency of transition to renewable energy.  CSG tax exemption is intended as an incentive to develop more renewable energy. The sponsors noted that the coal industry has been incentivized $400M over 43 years by severance tax exemption(s). The tax impact of the bill would be about a 12% change overall, or 2-3%/year; the change is incremental over 5 years.

The League follows the fundamental principle of sustainability, a way of life that seeks a balance in meeting current environmental, economic, and human needs without compromising the ability of future generations to meet the same goal.